Magazine article American Banker

Index of Banking Activity Rises on Improved Commercial Lending

Magazine article American Banker

Index of Banking Activity Rises on Improved Commercial Lending

Article excerpt

Byline: Paul Davis

Business activity in the banking sector accelerated slightly in October, rising for the fifth straight month, according to industry executives surveyed for American Banker's latest Index of Banking Activity.

The IBA's October overall reading of 55.7 compared to 55.4 in September. The IBA is a product of American Banker's regular surveys of bank executives and is published in partnership with VantageScore Solutions. The October index was based on 232 responses.

Improved commercial lending activity set the tone for the month. Commercial loan applications appeared to flow into banks at an accelerated pace; October's reading of to 60.1 compared to 52.7 a month earlier. Approvals for those applications had a reading of 59, showing more momentum compared to September's reading of 55.

The IBA is a diffusion index. Readings above 50 in the composite indicate a monthly expansion of activity and readings below 50 point to contraction. (For contrary indicators, such as the components that track loan delinquencies and loan-rejection rates, a reading above 50 is considered evidence of deterioration in business activity.) The further from 50 a reading is, the stronger the indicated change.

The pace of consumer applications cooled slightly, coming in at a reading of 50.3 in October from 50.9 a month earlier. But the reading for approvals rose to 59 from 55 in September.

Credit quality continued to improve, albeit at a slower rate. …

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